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Gavin Teo is a Senior Associate at Comcast Ventures.

According to the World Health Organization (WHO), 360 million people globally and 38 million people in the U.S. suffer from some form of hearing loss. Nine out of 10 cases can be treated with technology.

Today, the retail market for hearing aids generates $5 billion in the U.S. and $12-15 billion globally, growing three to six percent per year. Two and a half million hearing aids are sold in the U.S. each year, at an average retail price of $3,000 per pair. And just six brands — Sonova, William Demant, Siemens, GN Store Nord, Starkey Technologies and Widex — account for 98 percent of the market.


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For decades, selling hearing aids has been a high margin, low volume business. It has traditionally involved bundling hardware and “service” (audiogram and fitting) into a highly specialized sale. Additionally, there are around 13,000 certified audiologists in the U.S., each of whom sell an average of 16 devices a month.

Changes on the retail front are transforming this into a low margin, high volume business. CostCo’s Hearing Aid Center is known for selling mid and high-tier models at competitive prices, with pricing ranging from $1,500 to $2,000 per pair, including service. By some estimates, CostCo sells 250,000 units in the U.S. per year, accounting for 10 percent of the total retail market, and their business has been growing by 26 percent per year. Companies like Embrace and Hi HealthInnovations, a United Healthcare subsidiary, have decoupled service and product. These companies sell hearing aids direct-to-consumer, pricing a mid-tier model at $1,200 to $1,600 per pair.

“Smart hearing apps” are driving innovation and accelerating price competition

But smartphones are making it possible for low cost, scientifically-validated mobile apps to augment or potentially replace established technology. An expanding list of “smart hearing apps”, most freemium or priced less than $3.99, have been published in the iOS app store in the last year. This includes EARs by Ear Machine, BioAid, Real Clarity by Soundfest, and SoundAMP by Ginger Labs. Next-gen device companies such as Aria, SoundHawk and Audibel are developing advanced Bluetooth-enabled hardware with mobile apps in mind, painting a vision for the hearing aid as a hub for cellular communications or headphone replacement. Advanced Bionics has developed the Neptune, a waterproof sound-processor enabling swimmers to hear in the water.

The most advanced smart hearing apps leverage the smartphone’s microphone and processor to enhance sound quality and regulate the loudness of environmental noise, transmitting the result back through the earphones, effectively emulating a hearing aid via software. Some companies have started to think beyond the handset, exploring direct partnerships with wireless carriers for premium services, where the algorithm in a smart hearing app might be packaged as a personalized VOIP service for people who are hard of hearing.

Smart hearing apps have the potential to expand the overall hearing market, further accelerating price competition in traditional devices and retail channels. The WHO estimates that current production of hearing aids meets less than 10 percent of global demand.

As gatekeepers in a regulated value chain and as service providers responsible for consultation and fitting, audiologists have a cost structure to maintain in the face of falling prices. The most progressive audiologists realize that to compete against big retailers with economies of scale, they need an updated value proposition. Will audiologists allow their services to be disintermediated? Or will they embrace the fact that even as hardware commoditizes, software can be a valuable part of their service, potentially attracting new and younger demographics of users who can later be upsold to full-fledged devices?

As more smart hearing apps launch in the iOS and Android app stores, some will inevitably be gimmicks where sound input is directed to sound output without any signal processing other than adjustable volume. Others will advance the limits of what a scientific algorithm can do to transform a smartphone into a personalized hearing device. How will consumers be able to tell the difference before they download? Can the best app developers educate consumers on the technology behind their apps? Or will software rapidly commoditize, leading to a race to the bottom on price, similar to what we’ve seen in the diet and fitness tracking app space?

One thing is for sure, expect more disruption. Hearing aids are no longer a quiet corner of mobile health.

Gavin Teo is a Senior Associate at Comcast Ventures. He invests in healthcare and consumer businesses.

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